The One Big Beautiful Bill (OBBB) is poised to bring countless changes to the world of higher education finance in 2026. From restructuring federal student loans to trickle-down effects of other OBBB provisions, there is great opportunity for credit unions in the coming year and beyond.
PLUS loan changes reshape the landscape
Among the most significant changes to federal student loans under the OBBB is the elimination of the Grad PLUS program, long used by graduate students to bridge tuition funding gaps. The move leaves borrowers with fewer federal borrowing options, driving greater reliance on private loans or alternative financing.
For credit unions, this creates a window to expand in-school lending solutions tailored to graduate and professional students who will no longer have PLUS loans as a fallback.
Restructured repayment plans
The legislation also reshapes and streamlines federal repayment plans. Key updates include:
- Plan elimination: Both the SAVE Plan and Pay As You Earn (PAYE) are slated for elimination.
- Standard repayment plan: The new Standard plan establishes fixed monthly payments over a timeframe determined by the total amount owed, ranging from 10 to 25 years.
- Income-Based Repayment (IBR) expansion: Borrowers are no longer required to demonstrate “partial financial hardship” to qualify, and most will pay 10% of their discretionary income each month.
- New Repayment Assistance Plan (RAP): RAP payments will be calculated on a sliding scale based on adjusted gross income, and will typically range from 1% to 10% of earnings. RAP leads to student loan forgiveness after 30 years, rather than the 20 or 25 years of other plans.
Medicaid cuts could impact higher education budgets
The bill also includes nearly $1 trillion in Medicaid cuts over 10 years, a move that could significantly impact state budgets.
Historically, higher education is one of the first areas to face cuts when state budgets are under pressure. If this occurs, state universities could see reduced funding, leading to tuition hikes and an even greater reliance on student loans.
CFPB budget cuts and borrower protections
The Trump administration is also moving forward with plans to cut the Consumer Financial Protection Bureau’s budget in half, a move that weakens oversight in areas like student loan servicing and debt collection.
While diminished regulation may reduce compliance pressure for lenders, it also risks eroding borrower trust—creating an opportunity for credit unions to differentiate themselves through transparency and borrower-first practices.
The refinance opportunity
With the elimination of Grad PLUS, growing state budget pressures, and fewer federal student loan repayment pathways, borrowers face a future that is both uncertain and more expensive. Those relying on low (or no) payments from the now-eliminated SAVE and PAYE plans will see their monthly payments increase significantly. As a result, many may seek better options from private lenders.
The road ahead
The One Big Beautiful Bill represents one of the biggest shifts in student lending in decades. With the government stepping back, credit union lenders have an opportunity to introduce or expand private student loan offerings, and to deepen long-term member relationships.
Additionally, the declining interest rate environment and elimination of the SAVE and PAYE plans will spur student loan refinance activity for borrowers who wish to have more control over their student loan payments and payoff.
CU Student Choice offers custom in-school and refinance student lending solutions for hundreds of credit unions nationwide, including a unique private education line of credit. Contact us to learn more about how Student Choice can make it simple to offer customized student lending solutions that benefit your current and future members.
